Lots of the oozy, decomposing organic material created decades ago by stormwater runoff has been foundunderground all over the six-acre site around Prospect Lake, where more than 250 high-end apartments are planned.

The spongy ground has pushed back action on a development agreement until early June. Now, the developer says construction isn't likely to start before the fall. When the City Council approved the project in June, ground was to be broken this month.

Mucky ground isn't stable enough for regular concrete slab foundations, said Ed Chesney, the city's environmental manager, so a more expensive option using timber pilings will likely have to be used. That's a cheaper alternative than dredging up the muck, he said.

The project first stumbled in June when city officials discovered that Richard Zahn, Prospect's former CEO, had pleaded guilty to corruption charges in South Carolina the previous year.

The City Council approved Prospect's bid, although Mayor George Cretekos voted no, saying he was uncomfortable that Prospect didn't tell the city about Zahn and his legal problems. Prospect officials said they thought the city already knew.

The project stalled again as the city attempted to disentangle federal claims on the land from the U.S. Department of Housing and Urban Development and the U.S. Environmental Protection Agency.

Those issues are close to being resolved, said Rod Irwin, assistant city manager for economic development.

Irwin said he didn't think the muck would foul the gears of an eventual deal.

"I don't see this an impediment that will be insurmountable at all," Irwin said.

Prospect engineers found the muck recently while doing prep work on the site, said Geri Lopez, the city's economic development and housing director.

"We didn't know it was there. It's an unexpected cost," she said.

The city and Prospect will decide how to handle the expense, Irwin said. The city will review Prospect's revised cost estimates and decide how much — if anything — it will contribute.

Downtown boosters, who touted the apartment complex as a necessity to lure high-tech workers to live near a growing tech sector downtown that employs about 700, are crestfallen at the latest setback.

"A huge disappointment," said Bill Sturtevant, chairman of the Clearwater Downtown Partnership. "We're in dire need of residential downtown and every delay just sets us back further and further."

Charlie Frago can be reached at cfrago@tampabay.com or (727) 445-4159. Follow him on Twitter @CharlieFrago.

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